Bank repossessions, the final stage of the foreclosure process, fell 9 percent month-to-month and were down 35 percent from a year ago. Still the numbers are on pace for nearly a half a million properties to be repossessed in 2013. That’s an improvement, but still well above normal levels.

(Read More: Dire Predictions For Housing Recovery)

The picture is also mixed geographically – Arkansas (up 143 percent), Oklahoma (up 103 percent), Maryland (up 74 percent), Washington (up 71 percent), New Jersey (up 33 percent), and New York (up 21 percent) –as states that require a judge in the foreclosure process as well as those with new laws protecting borrowers, are seeing a spike in repossessions.

“The increases in judicial foreclosure auctions demonstrate that these delayed foreclosure cases are now being moved more quickly through to foreclosure completion,” notes RealtyTrac’s Daren Blomquist in the report.

(Read More: Map: Tracking the US Real Estate Recovery)

“Given the rising home prices in most of these markets, it is an opportune time for lenders to dispose of these distressed properties, either at the foreclosure auction to a third-party buyer, or by repossessing the property at the auction and subsequently selling it as a bank-owned home.”

Judicial foreclosure auctions were up 34 percent from June of 2012, as Realtors report “brisk” sales of these distressed properties. Investors and regular buyers have been competing for a decreasing supply of properties. Nationwide, inventories of all homes are down dramatically, as a large number of underwater borrowers and borrowers with very little home equity are still unable to sell.

(Read More: Apartments Reap Rewards of Rising Rates)

Florida, Nevada, Illinois, Ohio and Georgia posted the top five state foreclosure rates for the first half of the year, according to RealtyTrac.

Article source: http://www.cnbc.com/id/100877414

“What are they so excited about?” asked Hunter. “That they have pricing power.”

Housing completions fell 0.9 percent to an annualized rate of 690,000, well below demand. Underlying demand consists of new households forming (about 1.1 million, according to Census data,) replacement demand (about 250,000 homes) and second home demand (about 50,000,) according to IHS Global Insight.

“The wide gap between housing completions and underlying demand suggests that inventories are likely to get leaner over the next 12 months,” IHS analysts said in a report to investors. “For the record, it takes about seven months on average for a single-family permit to turn into a completed home.”

The supply pinch can be seen quite dramatically in California, where there was barely a two-month supply of homes for sale in May. That, and a change in the mix of home sales from distressed to nondistressed, pushed the median sale price up 32 percent from a year ago. Some might call that a “bubble,” but the real state agents do not.

(Read More: Rising Rates Scare Borrowers Into Action)

“While home prices are increasing at levels above those observed in 2006-2007, the fundamentals of the housing market are much more solid than what we experienced a few years ago,” said Leslie Appleton-Young, chief economist for the California Association of Realtors. “More home buyers are putting down larger down payments, and many of them are opting for more stable loan products.”

That may be, but the jump in the median California home price jump is predominantly due to a change in the mix of homes selling, that is, more nondistressed sales and fewer foreclosure and short sales. The median price is where half the homes sell for more and half sell for less. In May, distressed properties accounted for 31 percent of total sales in California, down from 52 percent of sales a year ago, according to Propertyradar, a data and analytics company. Meanwhile, nondistressed sales were 69 percent of total sales, up from 48 percent a year ago.

Article source: http://www.cnbc.com/id/100821976

(Read More: US Home Sales Rise to Highest Level in More Than 3 Years)

First time home buyers are already dropping out of the market, representing just twenty-nine percent of home buyers in April, according to the NAR—the lowest in two years. Rising mortgage rates, now at their highest in two months, are playing a part, but there are also fewer low-end homes to buy. The number of homes in the foreclosure process is now down nearly twenty-five percent from a year ago, according to a new report from Lender Processing Services.

Just eighteen percent of home sales in April were of distressed properties, the lowest since the Realtors began tracking this number in 2008. Compare that to thirty-five percent about a year and a half ago. Sales of homes priced below $100,000 were down ten percent in April compared to a year ago, while every other price range saw sales gains. Those who can get credit are now competing for what little there is to buy, and pushing prices well beyond expectations.

(Read More: Mortgage Applications Sink as Interest Rates Jump)

“I don’t see it lasting,” added Fairweather. “I think the minute they increase interest rates, you’ll see people pull back.”

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100758136

(Read More: US Pending Home Sales Tick Upward in March)

“In terms of our mix, less is going to Arizona and California today,” said Justin Chang a principal at Colony. “Our mix is increasing on east coast, Georgia, Florida, we’re active in Texas. I think over time some of the early markets will become a smaller part of our overall portfolio.”

Some investors are also starting to look at new construction, as home builders start to ramp up production again. The key is to find new product that is cheaper than replacement costs, which still is not that easy. So far investment has mostly gone only as far as distressed new homes, but as prices rise, that may change.

“On home building, there’s a lot of chatter about that. We are in some conversations with builders,” explained Chang, who admits the economics have not been compelling yet. “Over time you’ll see more and more of these transactions, and we may do one as well.”

Another potential strategy going forward is a consolidation, as investors turn away from distressed properties and focus on so-called “Mom and Pop” landlords, who may buy just one or two properties. There are an estimated 14 million single family rental homes owned by this cohort.

“If you think about all of the major institutions maybe owning 70,000 total homes compared to the market size of 14 million homes, the long term potential is enormous. Institutions are literally a fly on an elephant,” said Aaron Edelheit, CEO of The American Home, an Atlanta-based company that owns and manages about 2,500 homes. “We may look back and realize that the REO [real estate owned] to rental space was only the foundation for an exponentially larger industry with institutions owning hundreds of thousands, if not millions, of homes.”

(Read More: Next Boom? ‘Spec’ Homes Are Back)

There are 7.2 million more renters today than there were in 2004, and just 400,000 more homeowners, according to the U.S. Census.

Despite the recovery in home sales, the homeownership rate continues to fall, from an all-time high of 69.2 percent to 65 percent in the first quarter of 2013. As home prices rise and the employment picture improves, more people will come back to home ownership, and some of the new rental homes will inevitably be sold, but certainly not all of them.

“If you buy homes in areas with below-median income, I think the mortgage market is going to have harder time providing credit to these people, and it’s going to take longer for that to recover,” said Bloemker. “We think that these homes are more likely to be long term rentals, and those are likely to end up in the hands of institutional investors.”

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC
—CNBC’s Stephanie Dhue contributed to this story

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100700113

Inventories are tightest on the low end of the market, where investors came in and bought most of the distressed properties and are now holding them as single-family rentals. There is about a four-month supply of homes priced under $100,000, while there is around a twelve-month supply of homes priced over $500,000. That’s why sales of those low-end homes are down 16 percent from a year ago, and sales of higher-end homes are up 25 percent, according to the Realtors.

(Read More: Housing’s Big Challenge: Student Debt)

“The housing shortage is going to continue,” claimed Yun, who says the builders need to ramp up housing starts by 50 percent. He admits that is unlikely to happen due to land, labor and supply constraints.

Weak supplies are pushing home prices up far faster than wage growth, which is keeping first-time buyers especially on the sidelines. These buyers made up just 30 percent of the market in March, compared to the historical norm of 40-45 percent. They just can’t compete with all cash investors.

(Read More: Why Housing Affordability Is at Risk)

But if prices get too high, investors could leave the market. Their share was already down in March to 19 percent compared to 22 percent just one month ago. The danger is that they will start to unload the homes they own, which would bring much-needed supply back but which could also turn home prices in the other direction.

Article source: http://www.cnbc.com/id/100660999

While the number of distressed homes is falling, the remnants of the housing crash are still weighing on the recovery. There are still 5.1 million properties where the owner is either delinquent on the mortgage or the home is already in the foreclosure process, according to a new report from Lender Processing Services. As banks ramp up the foreclosure process, following delays due to processing fraud over the past few years, more distressed properties will come to the market. That may ease some of the price gains, although investors, still reaping rental rewards, seem ready for all of it.

(Read More: No Money? No Worries. Home Lenders Ease Rules)

What remains to be seen is for how long those rents will stay strong? With more Americans looking to buy and souring on renting, rent rates could start to come down. In addition, new supply of rental apartment buildings will be hitting the market in force over the next two years, as developers have been increasing multi-family housing construction.

(Read More: Defying Gravity: Miami Condos Soar Again)

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100592690

Nevada instituted a new law criminalizing faulty foreclosures. Banks are taking a big breather there, resulting in the foreclosure backlog doubling in the last 8 months. Massachusetts, a non-judicial state, saw a similar jump after new state foreclosure legislation, and California’s Homeowner Bill of Rights, modeled on Nevada’s law, went into effect in January 2013, so it too will likely see a slowdown in the clearing of distressed loans.

It all brings into question the recent jump in home values, which is being caused by a huge drop in supply of distressed homes.

(Read More: Taking The Real Estate Recovery Local)

Sale prices of homes jumped nearly 10 percent in January, according to CoreLogic. Even with the price surge, inventories continue to drop dramatically across the nation, perhaps because would-be sellers want to see just how high prices will go before testing the waters.

Housing bulls seem unconcerned about the so-called “shadow inventory” of distressed properties, but perhaps they should be. Of the loans that were in foreclosure in January 2012, 42 percent still are, according to LPS. Just 33 percent moved to bank repossession or other forms of liquidation.

In addition, while new mortgage delinquencies are falling in non-judicial states, they are increasing almost 20 percent in judicial states, according to Lender Processing Services.

“The line that we would draw goes through home prices,” Blecher speculated. “If those back logs are having any impact on home prices that could drive new problem loans as well.”

(Read More: Pending Home Sales Soar Despite Rough Winter)

Article source: http://www.cnbc.com/id/100533234

(Read More: Home Buyers Are Back, but Where Are the Houses?)

“What’s holding people back from buying a property is a fear of selling their property and not being able to find one. That’s what the problem is,” noted Herrera.

The Las Vegas market is being fueled by investors, but even the investors can’t find the great bargains anymore. While the economy has improved some, the drop in foreclosures is really due to a new law that went into effect in Nevada last year; it criminalizes faulty foreclosures. Banks have therefore tried to do more short sales and loan modifications. Foreclosures in Nevada dropped 36 percent in 2012 from the previous year, according to RealtyTrac, but the distress is still there.

“People in Las Vegas talk about shadow inventory to the point where nobody really wants to talk about it anymore, said Mike Brunson, a local appraiser. “People will argue and say it isn’t, but I can name a dozen people off the top of my head who have been in their houses for over three years without a payment.”

Brunson called Las Vegas the Titanic of the real estate market. It was once thought unsinkable, and even now that the worst is over, he still thinks the market is on a well-provisioned life raft, not on solid ground.

“The only thing that concerns me is that we have been here before and the market itself is not what is driving the price increases. It’s not that we have new employers coming in and creating tens of thousands of new jobs that are leading to people buying new houses. It’s ‘Las Vegas is on sale,’ and investors are buying up everything they can in the used market.

Whatever the cause, the result is new construction and new life breathed into the nation’s home builders.

“There’s been a lot of talk about shadow inventory. It’s gone on for years, and the reality is there’s not enough inventory out there to meet demand today. Demand has increased, certainly our buyers see that, and we’re getting a lot of buyers because of that,” argued Andrews, whose company is, he said, building 150 percent more homes than a year ago.

(Read More: Home Buyers Are Back, but Where Are the Houses?)

Brunson acknowledged there is no question the demand is real. The sales are real. But he still worries about the fundamentals, such as the slow economic growth and the fact that so much of the funding for new home sales is coming from low down payment, government-backed mortgages.

“We have been here before,” said Brunson.

What remains to be seen is if history will repeat itself or if this recovery is as unique as the collapse that preceded it.

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100522314

Supplies are down across the nation, not just in the former crash markets, like Phoenix and Las Vegas, where investors decimated inventories of distressed homes in bulk purchases. Listings are down 31 percent in Seattle from a year ago, down 32 percent in Denver, down 20 percent in Houston, down 37 percent in Boston, according to local Realtor associations.

(Click Here: Recover Watch Map, Complete Coverage)

“At the moment it’s a seller’s market again,” said David Fogg, a real estate agent in Burbank, CA. “Very low inventory, very low interest rates, almost no bank inventory of homes, it’s crazy out there. Every good property I’ve listed this year has brought 10-50 offers and sales prices 10-20 percent over comps. Cash is King.”

Nearly one third of all existing home sales in January were paid for in cash, and not just by investors, who are making up a shrinking share of the market. Fierce competition is forcing buyers to use every advantage, given that so many are going after so little.

In California’s San Fernando Valley there are usually over 9,000 homes for sale this time of year, according to real estate agent Billy Wynn. Today there are just over 1,400.

“Realtors are getting so many offers they are taking the homes off the market and not accepting additional offers before any offer is even accepted,” said Wynn. “This is real estate bubble 2.0 on steroids.”

It is a puzzling situation, given all the warnings of a tsunami of so-called “shadow inventory” that was supposed to be flooding the market right now. As it stands, fewer distressed properties are coming to the market.

“The ticking time bomb of shadow supply has been diffused by a combination of foreclosure processing delays in judicial states, legislation slowing down the foreclosure process in non-judicial states, foreclosure prevention programs and initiatives encouraging short sales,” said Daren Blomquist of RealtyTrac. “Notably, in 2012, was the National Mortgage Settlement, which both encouraged foreclosure prevention and short sales as an alternative to foreclosure, and the loosening of short sale guidelines by Fannie Mae and Freddie Mac in November.”

As a result, short sales, where the home is sold for less than the value of the mortgage, are rising as a share of total distressed sales, while bank-owned home sales are falling. Investors are now competing for such little supply that they are ironically pricing themselves out of the market.

(Read More: Distressed Homes Still Drive Sales)

“We are hearing also, that new home buyers are not really looking at the foreclosure market—the houses are either not in good neighborhoods or the house is in bad condition and needs a lot of updates,” noted Paul Miller, an analyst at FBR. “So home buyers are either going to new-builds or being very picky with the type and shape of the house. We are hearing from plenty of mortgage brokers that they are working with many couples, and they just can’t find the perfect house.”

Article source: http://www.cnbc.com/id/100512238

(Read More: Pending Home Sales Soar Despite Rough Winter)

Banks are making more of an effort to do short sales instead of taking a home to foreclosure, and new federal guidelines are streamlining the process. That led to a 15 percent drop in sales of bank-owned homes and a 6 percent increase in short sales. This has helped home prices because short sales on average sell for a higher price than do bank-owned homes, because they are usually neither abandoned nor vandalized.

“Although foreclosure-related sales represent a shrinking share of total sales, primarily because of fewer bank-owned purchases, distressed sales are still a disproportionately high portion of the overall housing market,” said Daren Blomquist, vice president of RealtyTrac. “And while distressed properties — whether bank-owned, pre-foreclosure or short sales not in foreclosure — are still selling at a significant discount compared to non-distressed properties, average distressed property prices are increasing in many markets thanks to strong demand and limited inventory.”

(Read More: Housing May Not Be as Healthy as It Looks: NAHB Pro)

Limited inventory continues to be the key in today’s housing market, driving prices higher than most analysts expected. This is surprising, as distress in the market has not simply vanished. There are currently 1.7 homes in the foreclosure process and 1.5 million more seriously delinquent loans (90 days without a payment), according to a new report from Lender Processing Services. Banks are being more aggressive with loan modifications and principal forgiveness, but many of these homes will inevitably end up going back to the banks.

“Inventories continue to be low because non-distressed sellers are largely absent from the market, apparently waiting for prices to increase even more before they decide to sell,” noted Blomquist. “I think we are seeing signs of the shadow [foreclosure] supply hitting, but more on a market-by-market basis and often in the form of short sales as opposed to REO [bank-owned] sales — although REO sales are starting to show signs of life in judicial foreclosure markets with bigger backlogs.”

(Read More: Homeowners Rise Above Water on Mortgages)

Strong investor demand for these properties is pushing prices higher, even creating bubbles in some of the formerly hardest hit markets, like Phoenix and Las Vegas. If prices get too high, however, and investors can’t reap the returns they need, then supplies could grow. So far that has not happened, but home prices are rising far faster than anyone predicted.

(Read More: Taking The Real Estate Recovery Local)

Article source: http://www.cnbc.com/id/100503223